Palo Alto looks to narrow down its infrastructure priorities

City considers which projects to fund through proposed hotel-tax hike

As Palo Alto marches toward placing a hotel-tax increase on the November ballot, city officials are still trying to figure out exactly what to buy with the revenues, should the measure prevail.

A committee of City Council members will consider on Tuesday morning a staff recommendation for spending the roughly $30.8 million that the city expects to brining in by leveraging a 2 percent increase in hotel taxes. The amount is a reduction from the $46.2 million that the council's Infrastructure Committee was projecting to get from the tax increase in March, when it recommended a 3 percent jump from the current rate of 12 percent.

The revenues from the new tax would supplement nearly $90 million from other sources that the city has earmarked for infrastructure fixes. This includes more than $12 million from recent and projected budget surpluses, $8 million from the city's Infrastructure Reserve and more than $30 million from the city's development agreement with Stanford University Medical Center, a deal that includes $22.1 million for "infrastructure" and $12.3 million for "sustainability." Revenues from new hotels (even without the tax increase) could also be leveraged into $33.6 million through certificates of participation, a long=terdebt-financing mechanism.

Overall, the city expects to have about $118 million on hand for infrastructure projects if voters pass the measure in November. Exactly how this money will be spent is the question that the Infrastructure Committee will take up Tuesday night.

The largest and most urgent item on the city's shopping list remains a new public-safety building that would replace the cramped and seismically unsound police headquarters at City Hall. With an estimated cost of $57 million, the project represents roughly half of the city's infrastructure budget. The council plans to pursue this project, as well as the rehabilitation of an outdated fire station near Rinconada Park, even if the tax measure doesn't pass. Council members are also designating a new downtown garage, with an estimated price tag of $13 million, as a top priority that should be addressed as soon as possible.

Other projects leave room for debate. With the city looking to trim about $15 million from its initial infrastructure budget, City Manager James Keene recommends in a new report reducing funding for Byxbee Park improvements from $3.6 million to $2.8 million and to trim the allotment for bike projects from $21 million to $20 million. And while the city still plans to rehabilitate the outmoded fire station near Rinconada Park, staff is now recommending deferring to a future date the proposed modernization of the Mitchell Park fire station, a $7.5 million project.

Keene is also recommending that the council remove from the infrastructure menu $4.6 million that was previously allocated for "parks catch-up." This work, like the landscaping upgrades at Byxbee Park, "can be either delayed or funded within the city's capital plan," he wrote.

His recommendation preserves other infrastructure projects previously endorsed by the committee, including a $1.7 million contribution toward a new bike bridge over U.S. Highway 101, $7.5 million for improvements to Arastradero Road and $9.6 million for a new garage around California Avenue.

If voters approve raising the hotel-tax rate from 12 percent to 14 percent, Palo Alto would join San Francisco and Oakland in having among the highest rates in the Bay Area. Most surrounding cities, including East Palo Alto, Menlo Park and Redwood City, have 12 percent rates. Mountain View's is 10 percent.

The council had also considered in March raising the hotel-tax rate by 3 percent, but members ultimately agreed by a 5-4 vote to pursue the smaller increase.

Posted by Wondering?
a resident of Another Palo Alto neighborhood
on May 16, 2014 at 4:25 pm

> that would replace the cramped and seismically
> unsound police headquarters at City Hall.

Since the Police Department is occupying a corner of City Hallthen City Hall must be seismically unsound. Wonder when the Keene Administration admit thatand just how much is it going to cost us to tear down and rebuild City Hall?

> The council had also considered in March
> raising the hotel-tax rate by 3 percent

We went thru this the last time. There is a huge difference between an increase of 3% and an increase of 3 percentage points. The council wanted to increase their take from 12% to 15%. Will the Weekly ever get it right?

"Just give us the money, we will figure out something to do with it." How long have they wanted a new police station, something like 20 years. If they have gotten along with the one they have now, why can't they continue to get along with it. And what happened to the $20 million golf course fiasco. And they are going to buy bonds with the money which means half of it will evaporate into interest payments. Slick. Just say no. Or better yet, how about some grade separations on the railroad.

Posted by resident
a resident of Another Palo Alto neighborhood
on May 19, 2014 at 1:16 pm

Sorry, I'm not voting for any tax unless Shepherd and Scharff and the overdevelopment 5 don't have control over the funds. (And wow, you would think infrastructure was something they never heard of before in their lives.)

Posted by taxpayer
a resident of Community Center
on May 19, 2014 at 2:42 pm

I'll be voting NO on any request to increase the size of government revenue. The more you feed the monster, the larger it grows. Until the compensation for government union employees is reduced to below the level of the private sector (private sector employees generally work harder and have less secure employment), I can't support increasing government revenues. Re-negotiate the union salaries or outsource the services and use the savings to fund the infrastructure needs. Don't allow the unions to collaborate with the elected officials (the unions fund many of their campaigns), to take more from the taxpayers.

Price is not running again, thank good ness. Let's make sure Shepherd is not re-elected!

Posted by Rupert of henzau
a resident of Midtown
on May 19, 2014 at 5:28 pm

Vote out-- why don't you run for council? You seem to know exactly what our city needs. My bet is that the incumbents that are running again will be reelecetd. The real,problem in the city is not necessarily the council, but the never satisfied public that think they live in a bubble. [Portion removed.]

Posted by Neighbor
a resident of Duveneck/St. Francis
on May 19, 2014 at 8:29 pm

I'm sorry, but that hotel tax rate hike is so high it will make Hawaii hotel taxes look cheap by comparison. A 14% hotel tax rate is crazy. I got phone polled and they had a bunch of questions about how to structure this bond, and clearly the only reason they picked this one is that residents polled didn't want more home parcel taxes, or they would have done that. The problem is that once again they just want too big a bond that throws in the kitchen sink.

Posted by Sunshine
a resident of Barron Park
on May 20, 2014 at 7:08 pm

So CPA wants a new police station. Well, why haven't they retrofitted the one they have now for seismic safety? They did that with Channing House. If retrofitting is good enough for seniors it should be good enough for the city.
So, say NO unless they find something else to use it for.
They could use it to eliminate ALL on grade RR crossings. Separate all places where the rails cross a street.
They could also repair the formerly repaired streets and sidewalks that are now either dug up or covered with jagged steel plates.
Stop ALL over building and up zoning. Just say no to large developments.

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